STATE BOARD OF EQUALIZATION

STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
450 N STREET, SACRAMENTO, CALIFORNIA
PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0080
(916) 322-2270 • FAX (916) 324-3984
www.boe.ca.gov
STATE BOARD OF EQUALIZATION MEETING
450 N Street, Room 121, Sacramento
March 29-30, 2016
NOTICE AND AGENDA
Meeting Agenda (as of 3/30/2016, 11:30 PM)
SEN. GEORGE RUNNER (Ret.)
First District, Lancaster
FIONA MA, CPA
Second District, San Francisco
JEROME E. HORTON
Third District, Los Angeles County
DIANE L. HARKEY
Fourth District, Orange County
BETTY T. YEE
State Controller
______
CYNTHIA BRIDGES
Executive Director
Agenda Changes
Webcast on Tuesday, March 29, 2016
Tuesday, March 29, 2016
9:00 a.m.
Pledge of Allegiance
Board Meeting Convenes*
Agenda items occur in the order in which they appear on the agenda. When
circumstances warrant, the Board’s Chair may modify the order of the items on the
agenda. Items may be postponed to a subsequent day; however, items will not be
moved to an earlier day or to an earlier session on the same day.
Board Committee Meetings**
These items are scheduled for Wednesday, March 30, 2016.
Board Meeting*
A.
Homeowner and Renter Property Tax Assistance Appeals Hearings
There are no items for this matter.
B.
Corporate Franchise and Personal Income Tax Appeals Hearing
(Contribution Disclosure forms required pursuant to Gov. Code, § 15626.)
B1.
Kamil Issa, 869808 +
For Appellant:
Mark A. Muntean, Attorney
For Franchise Tax Board: Judy Hirano, Tax Counsel
Ciro Immordino, Tax Counsel
Page 1 of 13
STATE BOARD OF EQUALIZATION MEETING
C.
TUESDAY, MARCH 29, 2016
Sales and Use Tax Appeals Hearings
(Contribution Disclosure forms required pursuant to Gov. Code, § 15626.)
C1.
Charles B. Hunt and Christy C. Hunt, 716686 (KH) +
For Petitioners:
Charles B. Hunt, Taxpayer
Christy C. Hunt, Taxpayer
For Department:
Nenita DeLaCruz, Hearing Representative
Local Tax Reallocation Hearing
(Contribution Disclosure forms not required pursuant to Gov. Code, § 15626.***)
C2.
1:30 p.m.
D.
Cities of Ontario, Palm Springs, San Diego, Santa Barbara, and Counties
of Sacramento, San Mateo, 525325, 525326 +
For Petitioners:
Eric Myers, Representative
Janis Varney, Representative
Mary Lewis, Representative
Matt Vespi, Representative
Paul Prather, Representative
Karen Zazzi, Representative
Christopher Michael, Representative
David Silberman, Attorney
Brian Wong, Attorney
For Notified Jurisdiction:
City of Oakland
Christopher Kee, Attorney
For Department:
Scott Claremon, Tax Counsel
Board Meeting Reconvenes*
Special Taxes Appeals Hearings
(Contribution Disclosure forms required pursuant to Gov. Code, § 15626.)
D1.
CK Specialty Insurance Associates, Inc., 605192 (STF) ‘CF’ +
For Petitioner:
Justin B. Connors, Taxpayer
William Gausewitz, Attorney
John A. Sebastinelli, Attorney
For Department of
Insurance:
Laszlo Komjathy, Attorney
For Department:
D2.
Andrew Kwee, Tax Counsel
Tobacco Republic Incorporated, 727806 (STF) +
For Taxpayer:
Oneida Morgan-Hawley, Taxpayer
Victoria Reyes, Witness
For Department:
Pamela Mash, Tax Counsel
Page 2 of 13
STATE BOARD OF EQUALIZATION MEETING
E.
Property Tax Appeals Hearings
There are no items for this matter.
F.
Public Hearing
F1.
TUESDAY, MARCH 29, 2016
Proposed Amendments to Sales and Use Tax Regulation
1698, Records, and Special Taxes Regulation 4901,
Records + ..................................................................................... Ms. Mash
Public hearing regarding proposed amendments to define the term
electronic cash register, update the terminology used to refer to
electronic records, and clarify taxpayers’ record retention
requirements.
G.
Tax Program Nonappearance Matters – Consent
(Contribution Disclosure forms not required pursuant to Gov. Code, § 15626.)
G1.
Legal Appeals Matters ................................................................ Mr. Angeja
 Hearing Notice Sent – No Response
1. Rafat Abusalah, 785272 (KH)
2a. Achamak Trading, Inc., 566418 (EH)
2b. Achamak Trading, Inc., 602887 (EH)
3. Boulin McNeal Enterprises, Inc., 727091 (AR)
4a. Color DNA, 255261 (AS)
4b. Color DNA, 586503 (AS)
5. Comataho, LLC, 835846 (KH)
6. Elevated Endeavors, LLC, 773647 (FH)
7a. Mohammad A. Ghazali and Rozina Ghazali, 468075 (KH)
7b. Mohammad A. Ghazali and Rozina Ghazali, 552485 (KH)
8. Green Valley Bistro Station, LLC, 823440 (GH)
9. Mahmoud Habhab, 732517 (FH)
10. Thelma J. Harris and Terry D. Harris, 734703 (CH)
11. Donald Edward Holly, Jacqueline Allene Holly, and Douglas
Edward Holly, 770612 (EH)
12. Jawed R. Hussain, 741108 (GH)
13. Il Massimo, LLC, 489269 (BH)
14. Natural Nine, Inc., 647406 (AA)
15. Vincent Nicoletta, 729913 (AS)
16. Maria Guadalupe Ramos, 611491 (AP)
17. Son Xuan Hoang and Hanh T. Nguyen, 353517, 358630 (STF)
 Hearing Notice Sent – Appearance Waived
18. Capitol City Tile & Marble, Inc., 700760, 710433 (KH)
 Petition for Release of Seized Property
19. TL Supply, Inc., 930822 (STF)
Page 3 of 13
STATE BOARD OF EQUALIZATION MEETING
G2.
TUESDAY, MARCH 29, 2016
Franchise and Income Tax Matters ............................................ Mr. Epolite
 Hearing Notice Sent – No Response
1. Jack G. Hiehle, 860958
2. Glen A. Konkle and Patricia E. Konkle, 869993
 Decisions
3. Harold Baker and Jennetta Baker, 824055
4. Kenneth M. Cheatham and Deborah L. Petersen, 799200
5. Maurice C. Cion, 852247
6. Corning Enterprises, A California Limited Partnership, 846978
7. Damian Gross, 859824
8. Barbara Haydel, 574573
9. Daniel Krause and Crystal Krause, 859812
10. Kombiz Salehi and Nadya S. Metz, 727196
 Petitions for Rehearing
11. C&L Pacific Real Estate, Inc., 815463
12. Lily Hovanesyan, 838088
13. Naoki Oshima, 742173
There are no items for the following matters:
G3. Homeowner and Renter Property Tax Assistance Matters
G4. Sales and Use Taxes Matters
G5. Sales and Use Taxes Matters – Credits, Cancellations, and Refunds
G6. Special Taxes Matters
G7. Special Taxes Matters – Credits, Cancellations, and Refunds
G8.
Property Tax Matters .................................................................. Mr. Kinnee
 Petition-Reassessment of Unitary Escape
1. Calpop.com, Inc. (8132), 878234 ‘CF’
There are no items for the following matters:
G9. Cigarette License Fee Matters
G10. Legal Appeals Property Tax Matters
H.
Tax Program Nonappearance Matters – Adjudicatory
(Contribution Disclosure forms required pursuant to Gov. Code, § 15626.)
H1.
Legal Appeals Matters
There are no items for this matter.
H2.
Franchise and Income Tax Matters ............................................ Mr. Epolite
 Hearing Notice Sent – Appearance Waived
1. Michael McGuire, 709207
 Decisions
2. Jose Borges and Laura Borges, 604857
 Petitions for Rehearing
3. Michael J. Bills and Mary E. Bills, 610028, 782397
4. Robert E. Valdez and Judy M. Valdez, 819052
Page 4 of 13
STATE BOARD OF EQUALIZATION MEETING
TUESDAY, MARCH 29, 2016
 Section 40 (AB 2323) Matters
5. craigslist, Inc., 725838, 843070 +
6. Hexu Zhao, 849110 +
There are no items for the following matters:
H3. Homeowner and Renter Property Tax Assistance Matters
H4. Sales and Use Taxes Matters
H5. Sales and Use Taxes Matters – Credits, Cancellations, and Refunds
H6. Special Taxes Matters
H7. Special Taxes Matters – Credits, Cancellations, and Refunds
H8. Property Tax Matters
H9. Cigarette License Fee Matters
H10. Legal Appeals Property Tax Matters
I.
Tax Program Nonappearance Matters
(Contribution Disclosure forms not required pursuant to Gov. Code, § 15626.)
I1.
Property Taxes Matters............................................................... Mr. Kinnee
 Audit
1. Los Angeles SMSA Ltd., Partnership (2532) ‘CF’
2. Fresno MSA Limited Partnership (2552) ‘CF’
3. Cellco Partnership (2559) ‘CF’
4. California RSA #4 Partnership (2669) ‘CF’
5. XO Communications Services, LLC (7560) ‘CF’
6. Cox California Telcom, LLC (7640) ‘CF’
7. CallTower, Inc. (7960) ‘CF’
8. Crown Castle NG West, LLC (7982) ‘CF’
9. inContact, Inc. (7985) ‘CF’
10. Greenfield Communications, Inc. (8004) ‘CF’
11. TNCI Operating Company, LLC (8075) ‘CF’
I2.
Offer in Compromise Recommendations ................................ Mr. Anderson
1. Miranda Nicole Bender
2. Breann Nicole Bertino
3a. Courier and Chives, Inc.
3b. Brian Lally
4. Edmundo Gonzales
5. Manpreet Kaur
6. Mohammed Sohail Khan
7a. David Herbert Lacy
7b. My Florist – Ventura, LLC
8. Juan C. Lopez Mercado
9a. Moustache Corp.
9b. Antoine E. Alliaume
10. Albert Noghli
11a. Sara Aluti Peterson
11b. Body Gems, Inc.
Page 5 of 13
STATE BOARD OF EQUALIZATION MEETING
TUESDAY, MARCH 29, 2016
12a. Ricardo Quintero
12b. Norma A. Luna Galeana
13. Guadalupe Rios
14. Carla Stephens
I3.
Local Tax Reallocation Matters
There are no items for this matter.
Chief Counsel Matters
J.
Rulemaking
This item is scheduled for Wednesday, March 30, 2016.
There are no items for the following matters:
K.
Business Taxes
L.
Property Taxes
M.
Other Chief Counsel Matters
This item is scheduled for Wednesday, March 30, 2016.
Administrative Session
The following items are scheduled for Wednesday, March 30, 2016.
N.
Consent Agenda
O.
Adoption of Board Committee Reports and Approval of Committee Actions
P.
Other Administrative Matters
Q.
Closed Session
This item is scheduled for Wednesday, March 30, 2016.
Recess - The meeting will reconvene on Wednesday, March 30, 2016, at 9:00 a.m.
General information regarding Board and Committee Meetings can be found at
www.boe.ca.gov/meetings/boardcomm.htm. If you would like specific information
regarding items on this Notice and Agenda, please telephone (916) 322-2270 or email:
[email protected]. Please be advised that material containing confidential
taxpayer information cannot be publicly disclosed.
If you wish to receive this Notice and Agenda electronically, you can subscribe at
www.boe.ca.gov/agenda.
If you wish to listen to and/or view a live broadcast of the Board meeting, please go to
www.boe.ca.gov and click on
in the Board Meetings Section.
Page 6 of 13
STATE BOARD OF EQUALIZATION MEETING
TUESDAY, MARCH 29, 2016
The hearing location is accessible to people with disabilities. Please contact Rose Smith
at (916) 323-9656, or email [email protected] if you require special assistance.
Joann Richmond, Chief
Board Proceedings Division
*
Public comment on any agenda item, other than a Closed Session item or an
item which has already been considered by a Board Committee, will be accepted
at that meeting.
**
Public comment on any committee agenda item will be accepted at the beginning
of the committee meeting. Subsequent to committee meetings, committee
agenda items may be taken up separately during the Board meeting.
***
Municipalities are exempt from Contribution Disclosure requirements, for further
information please telephone Toya P. Davis, Contribution Disclosure Analyst at
(916) 327-1798 or email: [email protected].
+
Material is available for this item.
‘CF’
Constitutional Function – The Deputy State Controller may not participate in this
matter under Government Code section 7.9.
Page 7 of 13
STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
450 N STREET, SACRAMENTO, CALIFORNIA
PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0080
(916) 322-2270 • FAX (916) 324-3984
www.boe.ca.gov
STATE BOARD OF EQUALIZATION MEETING
450 N Street, Room 121, Sacramento
March 29-30, 2016
NOTICE AND AGENDA
Meeting Agenda (as of 3/30/2016, 11:30 PM)
SEN. GEORGE RUNNER (Ret.)
First District, Lancaster
FIONA MA, CPA
Second District, San Francisco
JEROME E. HORTON
Third District, Los Angeles County
DIANE L. HARKEY
Fourth District, Orange County
BETTY T. YEE
State Controller
______
CYNTHIA BRIDGES
Executive Director
Agenda Changes
Webcast on Wednesday, March 30, 2016
Wednesday, March 30, 2016
9:00 a.m.
Board Committee Meetings Convene**
Board Meeting reconvenes upon Adjournment of the Board Committee Meetings*
Agenda items occur in the order in which they appear on the agenda. When
circumstances warrant, the Board’s Chair may modify the order of the items on the
agenda.
Board Committee Meetings**
Legislative Committee ................................................... Ms. Ma, Committee Chairwoman
I. 2016 LEGISLATIVE BILLS
Recommendation for Board Position:
SB 680
Sales Tax: Exemption: Out of State Purchasers: Passenger Vehicles
(Wieckowski)
SB 1458 Property Tax: Exemption: Disabled Veterans (Bates)
AB 1642 Fire Prevention Fee: Due Date (Obernolte)
AB 1858 Unlicensed Automobile Dismantling Task Force (Santiago)
AB 2518 Sales Tax: Exemption: Low-income Housing Charities (Gomez)
AB 2570 Property Tax: Public Utilities Commission: Report to BOE (Quirk)
II. 2016 LEGISLATIVE BILLS
Discussion Only:
SB 987
Marijuana Value Tax (McGuire)
AB 2243 Medical Cannabis Tax (Wood)
Page 8 of 13
STATE BOARD OF EQUALIZATION MEETING
WEDNESDAY, MARCH 30, 2016
Customer Service and Administrative
Efficiency Committee.................................................... Mr. Runner, Committee Chairman
1.
Customer Service Center 2015 Report
A presentation of the Customer Service Center accomplishments in
calendar year 2015.
Business Taxes Committee..................................... Ms. Harkey, Committee Chairwoman
1.
Proposed amendments to Sales and Use Tax Regulation 1703,
Interest and Penalties, and Audit Manual Chapter 5, Penalties
Request approval and authorization to publish proposed
amendments to provide guidance with respect to the imposition of a
penalty for negligence or intentional disregard on a taxpayer’s first
audit liability.
2.
Proposed amendments to Sales and Use Tax Regulation 1702.5,
Responsible Person Liability
Request approval and authorization to publish proposed
amendments to clarify definitions, explain the applicable standard
of proof, and add a rebuttable presumption of when there is no
personal liability for certain types of persons.
3.
Proposed Cigarette and Tobacco Products Tax Regulation 4001,
Retail Stock
Request approval and authorization to publish proposed regulation
to provide a definition for “retail stock”.
Property Tax Committee ............................................... Mr. Horton, Committee Chairman
1.
Adoption of the State Assessment Manual
Adoption of the State Assessment Manual to provide the principles
and procedures used by the Board in the assessment of stateassessed property.
2.
Property Tax Rule 462.040, Change in Ownership—Joint Tenancies
Discussion and authorization to initiate the rulemaking process for
Property Tax Rule 462.040, Change in Ownership—Joint
Tenancies.
3.
Welfare Exemption for Low-Income Housing Properties
Opportunity to streamline the welfare exemption clearance
certificate process.
Page 9 of 13
STATE BOARD OF EQUALIZATION MEETING
WEDNESDAY, MARCH 30, 2016
Board Meeting*
Chief Counsel Matters
Items that appear under these matters provide information to the Members and may
require Board action or direction.
J.
Rulemaking
J1.
Sales and Use Tax Regulation 1506, Miscellaneous
Service Enterprises +.................................................................... Mr. Heller
Staff request for authorization to complete section 100 changes to
update the name of the entity within the Department of Consumer
Affairs responsible for licensing persons who dispense hearing
aids.
M.
Other Chief Counsel Matters
M1.
Lucent Technologies, Inc. v. State Board of Equalization and
Sales and Use Tax Regulations 1502, Computers, Programs,
and Data Processing, and 1507, Technology Transfer
Agreements + ............................................................................. Mr. Ferris /
Mr. Tucker
Discussion regarding potential rulemaking and other possible
administrative actions necessary to appropriately implement
Lucent Technologies, Inc. v. State Bd. of Equalization (2015)
241 Cal.App.4th 19.
Administrative Session
Items that appear under these matters provide information to the Members and may
require Board action or direction.
N.
Consent Agenda ........................................................................... Ms. Richmond
(Contribution Disclosure forms not required pursuant to Gov. Code, § 15626.)
N1.
Retirement Resolutions +
• Cheryl A. Blakeway
• Karen Fabiano
• Susan W. Lee
• Deanna Payne
N2.
Approval of Board Meeting Minutes
• February 23-24, 2016 +
Page 10 of 13
STATE BOARD OF EQUALIZATION MEETING
WEDNESDAY, MARCH 30, 2016
N3.
Proposed revisions to Compliance Policy and Procedures
Manual Chapter 2, Registration; Chapter 7, Collections;
and Chapter 8, Consumer Use Tax +
N4.
Proposed revisions to Audit Manual Chapter 1, General
Information; Chapter 4, General Audit Procedures; and
Chapter 6, Vehicle, Vessel and Aircraft Dealers +
O.
Adoption of Board Committee Reports and Approval of Committee Actions
O1. Legislative Committee
O2. Customer Service and Administrative Efficiency Committee
O3. Business Taxes Committee
O4. Property Tax Committee
P.
Other Administrative Matters
P1.
Executive Director’s Report ..................................................... Ms. Bridges
1.
Update on Resolution of State Controller’s Office
(SCO) Board of Equalization Review +
Update on actions to resolve the findings in the SCO Review
Report of the Board of Equalization’s Internal Accounting
and Administrative Controls.
2.
Report on time extensions to Calaveras and ....................... Mr. Gau
San Luis Obispo Counties to complete and submit 2016-17
Local Assessment Roll, pursuant to Revenue and Taxation
Code section 155. +
3.
Update on Operational Issues .............................................. Mr. Gau
A report providing information about management
developments of general interest will be provided.
4.
2015-16 State Employee Food Drive Results + ................... Mr. Gau
The Chair of the 2015-16 State Employee Food Drive will
present the successful results of this year’s annual Food
Drive.
5.
Employee Recognition Award Program ............................... Mr. Gau
Approval of nominees for the BOE Employee Recognition
Award Program.
Page 11 of 13
STATE BOARD OF EQUALIZATION MEETING
WEDNESDAY, MARCH 30, 2016
There are no items for the following matters:
P2. Chief Counsel Report
P3. Business Tax and Fee Deputy Director’s Report
P4. Field Operations Department Report
P5. Property Tax Deputy Director’s Report
P6.
Administration Deputy Director’s Report ....................................Ms. Murphy
1.
Contracts Over $1 Million
a. Department of Motor Vehicles contract for collection
of sales, use and/or special taxes pertaining to
vehicles and undocumented vessels. +
b. Department of Toxic Substances Control contract for
collection of fees pertaining to hazardous waste. +
c. Cal-Recycle contract is to provide for the collection of
the California Tire Fee. +
P7.
Technology Deputy Director’s Report ....................................... Ms. Fleming
1.
CROS Project Update and Actions
Progress on the CROS project to replace BOE’s two current
legacy tax administration systems.
P8.
External Affairs Deputy Director’s Report
There are no items for this matter.
Announcement of Closed Session ............................................................. Ms. Richmond
Q.
Closed Session
Q1.
Discussion and approval of staff recommendations regarding settlement
cases (Rev. & Tax. Code, §§ 6901, 7093.5, 30459.1, 50156.11).
Q2.
Pending Litigation: Raichart v. State Bd. of Equalization, Sacramento
County Superior Court Case No. 34-2014-00167903 (Gov. Code, §
11126(e)).
Q3.
Pending Litigation: Arriola v. State Bd. of Equalization, Sacramento
County Superior Court Case No. 34-2016-0188847 (Gov. Code, §
11126(e)).
Q4.
Discussion and action on personnel matters (Gov. Code, § 11126(a)).
Announcement of Open Session ................................................................ Ms. Richmond
Page 12 of 13
STATE BOARD OF EQUALIZATION MEETING
WEDNESDAY, MARCH 30, 2016
Adjourn
General information regarding Board and Committee Meetings can be found at
www.boe.ca.gov/meetings/boardcomm.htm. If you would like specific information
regarding items on this Notice and Agenda, please telephone (916) 322-2270 or email:
[email protected]. Please be advised that material containing confidential
taxpayer information cannot be publicly disclosed.
If you wish to receive this Notice and Agenda electronically, you can subscribe at
www.boe.ca.gov/agenda.
If you wish to listen to and/or view a live broadcast of the Board meeting, please go to
www.boe.ca.gov and click on
in the Board Meetings Section.
The hearing location is accessible to people with disabilities. Please contact Rose Smith
at (916) 323-9656, or email [email protected] if you require special assistance.
Joann Richmond, Chief
Board Proceedings Division
*
Public comment on any committee agenda item will be accepted at the beginning
of the committee meeting. Subsequent to committee meetings, committee
agenda items may be taken up separately during the Board meeting.
**
Public comment on any agenda item, other than a Closed Session item or an
item which has already been considered by a Board Committee, will be accepted
at that meeting.
***
Municipalities are exempt from Contribution Disclosure requirements, for further
information please telephone Toya P. Davis, Contribution Disclosure Analyst at
(916) 327-1798 or email: [email protected].
+
Material is available for this item.
‘CF’
Constitutional Function – The Deputy State Controller may not participate in this
matter under Government Code section 7.9.
Page 13 of 13